--DES Northeast Asia

Although Japan's LNG inventory for power generation fell to 1.8 mil tons as of Jun 7, the Organization for Cross-regional Coordination of Transmission Operators (OCCTO) announced on Jun 12 that its kWh monitoring indicates the country is expected to secure at least 9.707 billion kWh of spare power generation capacity during the period from Jun 27 to Aug 13. As in its previous monitoring report, OCCTO states that "there is no risk of a shortage from the perspective of fuel inventories." JERA, a major power company, also notes that "the supply-demand situation is stable for all companies, including other power utilities," and shows no signs of rushing to secure spot purchases.

In discussions among traders and portfolio players as well, buyers for second-half July delivery were reluctant to revise bids higher. Bids were capped at discounts of 5-20cts to DES Northeast Asia spot quotations for August. For first-half August delivery, European Vitol lowered offers to a discount of 3cts to the quotations. An Asian trader said, "Vitor is satisfied with the spread between DES Northeast Asia spot quotations and the Dutch TTF natural gas quotations, and they probably believe there is no need for buyers to hike their bids and push up DES Northeast Asia spot quotations." Meanwhile, buyers were unwilling to enter talks for August delivery before the front month of DES Northeast Asia spot quotations being rolled over on Jun 16. The market failed to detect any bids for August delivery to Northeast Asia.

However, supply concerns remain. According to several market sources, a fire has broken out at the 11.4 mil mt/year Tangguh project in Indonesia, causing a decline in LNG production. Since Kansai Electric Power, South Korea's E&S and POSCO are receiving cargoes from this project, "a certain degree of impact is expected," a South Korean end-user said. In Australia, where labor disputes are ongoing, while there are no reports of loading delays due to strikes, "a check of the vessel tracking system shows no empty vessels in the vicinity of the 8.9 mil mt/year Ichthys project, suggesting that loading may have been postponed in advance," an Asian trader said. JERA had originally scheduled a cargo loading for Jun 12.

--FOB Middle East, DES South Asia and the Middle East

Spot demand from South Asia was firm. State-run Indian Oil Corp (IOC) purchased a second-half June delivery cargo at $18.50-18.60 through a DES-based buy tender that closed on Jun 10. State-run GAIL also procured one cargo for Jun 15-30 delivery at around $18.30 through a DES-based buy tender that closed on Jun 10. On top of that, state-run Pakistan LNG (PLL) was reported to have purchased two cargoes from British BP at $18.9866 through a DES-based buy tender that closed on Jun 11. The cargoes were for delivery to the Port Qasim terminal (4.8 mil mt/year capacity) on Jun 13-14 and Jun 20-21.

--FOB Atlantic, DES Europe and South America

Argentina's Southern Energy (SESA) has signed a sales and purchase agreement (SPA) with Germany's state-owned SEFE for an eight-year term supply starting at the end of 2027, covering output from the 6 mil mt/year SESA project. However, the company does not appear to be rushing to secure new sales beyond that. SESA will supply SEFE with up to 2.4 million tons per year, including 400,000 tons of optional volume. This represents nearly the entire production capacity of its first FLNG, the "Hilly Episeyo" (annual capacity of 2.4 million tons), which is scheduled to begin operations at the end of 2027. Although the second FLNG, "Fuji MK2" (annual production capacity of 3.6 million tons), is scheduled to begin operations at the end of 2028, an industry source in South America stated, "Since there is still enough time, and a path to recoup funds has been established through the contract with SEFE, no concrete marketing efforts have yet been undertaken for the remaining production."